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LR 2002-02 Sales and Use Tax Medical Equipment Exemption: Orthotics

This Letter Ruling explains the application of the medical equipment exemption contained in the sales and use tax acts to orthotic devices.

In addition to hearing aids, hearing aid batteries, prescribed eyeglasses, and prescribed contact lenses under certain conditions, the sales and use tax exemptions for medical equipment also cover a general category of medical equipment described as "any other apparatus, device or equipment used to replace or substitute for a part of the human body … if the tangible personal property is purchased on a written prescription or order issued by a health professional". MCL 205.54a (1) (h); see also MCL 205.94 (1) (p) of the Use Tax Act for nearly identical language. Included within this portion of the exemption are devices that are directly used to replace missing internal or external body parts.

This language extends to devices that are used to support or supplement weakened or abnormal joints, limbs and other parts of the body provided the devices are purchased on a written prescription. Though devices used to support or supplement body parts may not entirely replace the body part, these devices nevertheless supplement a non-functioning portion of the body part. Support devices may serve to substitute for non-functioning bones, tendons, ligaments, muscles, nerves and soft body tissue. Items such as braces, canes, corrective shoes, crutches, pacemakers, dialysis machines, stoma appliances (colostomy, ileostomy, ureterostomy and catheters) trusses, and walkers are examples of the type of device that would be exempt if purchased on a written prescription.

Orthotic devices replace or substitute for a body part that cannot function normally. Orthotic devices designed for the ankle, for example, substitute for the malfunctioning portions of the lower leg. Orthotic devices designed for the foot replace soft tissue that is missing from the sole of the foot addressing tissue loss in diabetics and others.

Orthoses are most often dispensed by certified orthotists, generally on a written prescription. Orthotists that fulfill all education requirements of a nationally accredited program, including a one-year residency, and pass a certification examination administered by the American Board of Certification in Orthotics and Prosethics are granted the title of Certified Orthotist (CO), Certified Prosthetist (CP) or certified Prosthetist-Orthotist (CPO). However orthoses may be exempt from sales and use taxes when dispensed by persons other than orthotists provided the device serves to substitute or replace for a part of the human body, and it is purchased on a written prescription or written order issued by a qualified health professional.

March 4, 2002
LR 2002-2
June Summers Haas
Commissioner of Revenue